The name 'the IKEA effect' derives from the name of Swedish manufacturer and furniture retailer IKEA.

The IKEA effect is a cognitive i.e. mental bias in which consumers place a disproportionately high value on products they partially created.

Because of the IKEA effect, we are often willing to spend more money for experiences that require us to put in more work.

These experiences can be fun - play on emotion - but they often lead to overspending on the consumer's behalf.

The IKEA effect can also give us a warped perception of the end result - if we worked hard on something, we feel proud of it and tend to become overconfident in its quality.

So how did the IKEA effect start?

Having customers do most of the work, feel great about it, and at the same time perceive they have attained ‘greater value for money’ is the Holy Grail for companies.

In 1950, General Mills wanted ideas on how to sell more of its Betty Crocker brand of instant cake mixes. He put psychologist Ernest Dichter on the case.

His advice: replace powdered eggs in the cake mix with the requirement to add fresh eggs. All-instant cake mix makes baking too easy; it undervalues the labour and skill of the cake maker.

Give the baker more ownership in the result. The brand became a success. And the rest is history

But, why does the IKEA effect happen?

The IKEA effect is very similar to another cognitive bias called the endowment effect.

This makes people value items more highly if they belong to them, sometimes even if they just feel a sense of ownership over them.

Where the IKEA effect is different from the endowment effect is that it requires a person to contribute time and effort in the construction of something.


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▬ Contents of this video ▬▬▬▬▬▬▬▬▬▬
0:00 - Intro
Introduction 00:39
Because of the IKEA effect, we often need to spend more money 01:10
So how did the IKEA Effect start? 01:35
Why does IKEA Effect happen? 02:26
Where IKEA effect is different from andorement effect? 02:43
They are three main reasons to happen IKEA Effect 02:52
Self Assembling Furniture is finding the foolproof way everyone feels like they can accomplish 03:03
We Like things, we are associated with us 03:35
How can you use the IKEA effect? 04:03
The IKEA Effect suggests the secret to success is may the little more things are challenging to get accomplishment 04:43


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Written and Voice-over - ADITI SRIVASTAVA
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Edited by- Kranthi Kumar
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